Analysis of factors affecting production costs and profitability of milk and dairy products in Turkey

Abstract

White cheese, kashar cheese, yogurt, and ayran are among the most common products produced by the dairy industry in Turkey. The present study determined the production cost of 1 kg of these packaged products as well as the financial implications on their distribution and the total cost. The study also estimated the cost factors affecting the profitability of the products by identifying the cost differences between production regions and scales, using a mean regression model for each product. The study used the data collected through a survey involving 15 dairy plants of three different sizes located in five different regions and involved in raw milk production. The study found a 2-year average capacity utilization rate of the businesses to be 68.80%. The R2 of the analyzed products using the backward multiple regression model was 0.874 and above (p < 0.001). In conclusion, the regression analysis demonstrated that the major factors affecting profitability were the quantity of raw milk contained in the product, the sale price of the product, and the purchase price of raw milk.